Seven-year wait for full recovery is nearly over with UK economy set to return to pre-recession levels in 2014

The British economy will finally return to pre-recession levels in 2014 – bringing an end to a slump of nearly seven years.

A report today predicts gross domestic product – the broadest measure of the size of the economy – will reach its early 2008 peak in the second half of next year.

A year ago amid a much gloomier picture for the economy, the BCC predicted the pre-recession peak would not be reached until 2016. This was brought forward in August to the first quarter of 2015 but has now been revised again.

It will bring an end to the longest downturn for more than a century as Britain bounces back from t

The economy shrank by a devastating 7.2 per cent in 2008 and 2009 and GDP is still more than 2 per cent below the peak reached before the recession struck.

 

The British Chambers of Commerce is now forecasting growth of 1.4 per cent this year and 2.7 per cent in 2014 having earlier predicted 1.3 per cent for 2013 and 2.2 per cent for 2014.

 

John Longworth, director general of the BCC, said: ‘The upgrading of our short-term forecasts is testament to the sheer hard work of UK businesses, who have long-remained confident in difficult circumstances.’

 

He added: ‘It is really great that next year the UK economy is finally expected to bounce back from the deepest recession in modern times.

 

‘British businesses have remained determined to compete and grow in the face of difficult circumstances, and the upgrading of our short-term forecast is testament to their sheer hard work, resilience and creativity.’

 

But he warned of ‘longer-term challenges’, with the recovery driven by household spending and the property market rather than investment and exports. Small businesses were still struggling to obtain finance, he added.

 

‘Politicians must not take their eye off the ball in the run-up to a general election, and must ensure that the economy remains front and centre at all times,’ he said..

 

‘If we make important decisions to fix the long-term structural failure in business finance, continue to deliver a major infrastructure upgrade and do more to support exports, it is possible to achieve not just a good recovery, but a truly great and sustainable economy.’

 

The BCC reckons the government will borrow £106bnillio this year – not the £111billion predicted by the Office for Budget Responsibility in last week’s Autumn Statement.

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